BoJ left monetary policy unchanged as widely expected. The forecast for fiscal 2024 CPI core was downgraded, whereas fiscal 2025 CPI core forecast saw a slight upgrade. Notably, CPI core-core forecasts for fiscal 2024 and 2025 were left unchanged at 1.9%, indicating a steady path towards achieving Japan’s 2% inflation target sustainably.
Under Yield Curve Control, BoJ kept short-term policy interest rate unchanged at -0.1%. Additionally, target for 10-year JGB yield remains around 0%, with an allowance for fluctuation below 1.0% upper bound. These decisions were made by unanimous vote.
BoJ noted, “Consumer inflation is likely to increase gradually toward the BoJ’s target as the output gap turns positive, and as medium- to long-term inflation expectations and wage growth heighten.” The central bank also acknowledged the growing “likelihood” of realizing this outlook, albeit with an emphasis on the continued “high uncertainties” surrounding future developments.
In the median economic projections:
- Fiscal 2023 GDP growth at 1.8% (down from October’s 2.0%).
- Fiscal 2024 GDP growth at 1.2% (up from 1.0%).
- Fiscal 2025 GDP growth at 1.0% (unchanged).
On the inflation front:
- Fiscal 2023 CPI core at 2.8% (unchanged).
- Fiscal 2024 CPI core at 2.4% (down from 2.8%).
- Fiscal 2025 CPI core at 1.8% (up from 1.7%).
- Fiscal 2023 CPI core-core at 3.8% (unchanged).
- Fiscal 2024 CPI core-core at 1.9% (unchanged).
- Fiscal 2025 CPI core-core at 1.9% (unchanged).
